VANCOUVER, Aug. 20, 2014 /CNW/ - Terrace Energy Corp. (the "Company") (TSXV: TZR, OTCQX: TCRRF, FRANKFURT: 2TR) is pleased to provide the following operations update.
As previously announced, the Company recently completed a $23 million common share offering primarily to fund exploration drilling activities on its Big Wells and Maverick County projects and obtained through a subsidiary a US$75 million unsecured credit facility (which is non-recourse to the Company) to drill and develop it STS Olmos project.
Dave Gibbs, the Company's President and CEO commented: "These financings, which consumed much of management's recent focus, were absolutely critical in order to fully execute the Company's 2014 and 2015 exploration and development plans. We have commenced our expanded drilling program and are now positioned to focus on production targets."
The Company reports the following progress on each of its material projects.
Big Wells Buda Development Project, Dimmit County, Texas
Drilling operations are progressing on the initial Buda development well, the Price #1H. As planned, the well has been drilled to a vertical depth of 7,445' in order to obtain petrophysical data on the Buda formation before turning the well horizontal. The well encountered 128' of oil saturated limestone as anticipated with porosity readings as high as 7% and strong indications of natural fracturing. Operations are underway to sidetrack the pilot hole and prepare the wellbore for underbalanced, horizontal drilling. Once protective casing is set through the Eagle Ford Shale, the well will be completed as an open-hole horizontal in the Buda Limestone.
The Company has acquired an extensive "3-D" seismic survey over the leasehold position and has identified the next three drilling locations. Permitting is underway.
The project acreage is located in the core of the Eagle Ford Trend in South Texas and in close proximity to a number of prolific horizontal wells drilled into the naturally fractured Buda Limestone, including the publicized Hughes Heitz 302 3H, which produced approximately 300,000 barrels of light sweet crude oil in its first 24 months of reported production, according to the Texas Railroad Commission lease production reporting system as of June 2014.
NW AWP Olmos Development Project, McMullen County, Texas
Drilling operations continue on the Quintanilla #1H Olmos development well. The well encountered the Olmos pay sand as targeted at approximately 8,900' true vertical depth. To date, we have drilled approximately 3,400' of horizontal lateral in the target zone on our way to a planned total depth of 13,500' measured depth, with approximately 4,400' of horizontal lateral section. We anticipate concluding drilling operations in the next few days and will complete the well using multi-stage hydraulic fracturing. Completion operations will commence upon conclusion of the drilling operations and demobilizing the drilling rig. The Company owns a 33% working interest in this well and the assigned 200 acre drilling unit.
Upon successful completion of the Quintanilla well, the Company will also have earned the option to acquire a 33% working interest in an additional 3,400 (approx.) acres offsetting the well.
STS Olmos Development Project, McMullen and LaSalle Counties, Texas
Full scale development operations are underway on our STS Olmos Development Project with the initiation of our multi-well pad drilling operations. We are currently moving the Orion "Altair" rig onto our first three well drilling pad. This is a "walking rig" configuration capable of moving itself between multiple wellheads on each pad. The STS #1-6H, #2-6H and #3-6H will be drilled sequentially from the initial pad. The planned sequence will include drilling and casing surface holes on each of the three wells at a depth of approximately 5,000', then drill each well to a total depth of approximately 14,500' measured depth including approximately 5,200' of horizontal lateral in the targeted Olmos sandstone. Once drilling operations are concluded on the Section 6 pad, the rig will be moved to its next planned three-well pad site on the project and hydraulic fracturing equipment will be moved in on the Section 6 pad to simultaneously complete these wells in a "zipper frac" sequence.
As previously reported, the current development model for the STS Olmos Development Project envisions the potential for up to approximately 145 drilling locations. The Company will continue drilling multi-well pad locations using this "walking rig" configuration and will likely add a second rig to the project in 2015.
Maverick County Project, Maverick and Zavalla Counties, Texas
"Top- hole" drilling operations are complete on our first Buda Limestone development well, the Chittim Heirs #3H. The well has been drilled through the base of the Eagle Ford Shale and 5 ½" casing has been set at approximately 75 degrees in preparation for completing the well using an open-hole, underbalanced drilling technique with coiled tubing. The coiled tubing unit and underbalanced equipment are under contract and are expected in the field shortly upon completion of other projects currently in progress.
Permitting is underway for an additional Buda Limestone horizontal well to be drilled in the Southwest portion of the Ranch in Maverick County as well as two vertical wells in the Northeast to delineate potential associated with a large "Serpentine Plug" feature identified in the seismic records. The drilling of these three wells is scheduled to be completed in 2014, with additional Buda development wells scheduled for early 2015.
Dave Gibbs, further commented: "We are pleased with the progress we have achieved to date on all of our projects and are excited about the high level of activity going forward into the fall. We have secured a healthy balance sheet and are moving each of our major projects into active development. We expect to achieve a number of key successes and milestones over the next several months as these programs are executed."
About Terrace Energy
Terrace Energy is an oil & gas development stage company that is focused on unconventional oil extraction in onshore areas of the United States.
ON BEHALF OF THE BOARD OF DIRECTORS
Dave Gibbs, CEO
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
This press release includes forward-looking information and forward-looking statements (together, "forward-looking information") within the meaning of applicable Canadian and United States securities laws. Forward-looking information includes, but is not limited to: information regarding plans for the development of the Company's projects and the timing thereof, including the potential number of drilling locations on the STS Olmos Development Project and expectations regarding achieving key successes and milestones over the next several months. Users of forward-looking information are cautioned that actual results may vary materially from the forward-looking information disclosed in this press release. The material risk factors that could cause actual results to differ materially from the forward-looking information contained in this press release include changes to the Company's ability to access infrastructure in the vicinity of its projects at a reasonable price; changing costs for and availability of required goods and services; regulatory changes; risks relating to disagreements or disputes with joint venture partners, including any failure of a joint venture partner to fund its obligations; volatility in market prices for oil and natural gas; and all of the other risks and uncertainties normally associated with the exploration for and development and production of oil and gas, including geologic uncertainties, unforeseen drilling hazards, geological, technical, drilling and processing problems, accidents and adverse weather conditions. The forward-looking information contained in this press release represents management's best judgment of future events based on information currently available. The material assumptions used to develop the forward-looking information include: that the Company will be able to access infrastructure in the vicinity of its projects on reasonable terms; that the Company will be able to access the goods and services necessary in order to conduct further exploration, development and production at its projects on reasonable terms; that regulatory requirements will not change in any material respect; and that other aspects of the Company's operations will not be affected by unforeseen events. Statements regarding future drilling locations are based on geologic interpretations which are subject to revision as further data is developed. The Company does not assume the obligation to update any forward-looking information, except as required by applicable law.
SOURCE Terrace Energy Corp.